| 403 retirement plans are tax deferred retirement | | | | Fact 6: More Tax Savings |
| plans available to employees of educational | | | | All dividends, interests and capital gains earned in a |
| institutions and certain non-profit organizations as | | | | 403b account are on a tax-deferred basis. This |
| determined by section 501(c)(3) of the Internal | | | | means your earnings will grow tax-free until time |
| Revenue Code (IRC). | | | | you withdraw them. |
| I've 10 facts here on 403b which you should | | | | Fact 7: Part Time Employees Eligible To Contribute |
| know. | | | | to 403b Retirement Plans |
| Fact 1: The Workings Of 403b Plans | | | | Your employer must extend the 403b plan to all |
| You set aside money for retirement on a pre-tax | | | | the employees. |
| basis through a salary reduction agreement with | | | | However, certain employees may be excluded, |
| your employer. You choose from among the | | | | such as: |
| vendors offered by your employer where you | | | | - Employees who contribute $200 or less annually |
| want to invest the money. The money grows | | | | - Employees who are participants in an eligible |
| tax free until you withdraw it at retirement. | | | | deferred compensation plan (457 or 401k) or |
| Fact 2: who Can Contribute To A 403b | | | | participants in another TSA (tax sheltered annuity) |
| If you're an employee of tax-exempt | | | | - Non-resident aliens |
| organizations established under section 501(c)(3) | | | | - Students and employees who work less than 20 |
| of the IRC, you're eligible to participate and start | | | | hours per week |
| contributing. | | | | Fact 8: 403b Plan Does Not Reduce Social |
| Teachers, school administrators, school personnel, | | | | Security Benefits |
| nurses, doctors, professors, researchers, librarians | | | | Your contributions to a 403b reduce taxable |
| and ministers are contributors to the plan. | | | | compensation for federal (and in most instances, |
| Fact 3: Why Contribute to a 403b | | | | state) income tax purposes only. These |
| Your employer provides you with a pension upon | | | | contributions don't reduce wages for the purpose |
| your retirement. However, the pension plan may | | | | of determining Social Security benefits. |
| not provide an amount equal to your salary. A | | | | Fact 9: Special Tax Credit For Low-Income |
| 403(b) plan can provide a healthy supplement to | | | | Savers |
| your pension. | | | | Eligible savers will receive a tax credit of up to |
| Fact 4: How Much You Can contribute Annually | | | | 50% or up to $2,000 in contributions to an IRA, |
| You can contribute the smaller of: | | | | 403b, 457, SIMPLE, 401k plan and other |
| - The elective deferral limit of $15,500 or | | | | tax-favored plans. The full credit is available to |
| - Up to 100% of including compensation or | | | | joint filers whose adjusted gross income (AGI) is |
| - If you've employer matches or other employer | | | | less than $53,000, and for singles whose AGI is |
| contributions, limits are $46,000 or 100% of | | | | under $26,500. |
| compensation (whichever is lower). You're still | | | | Fact 10: A 403b Can Be Rolled Into An IRA |
| limited to the employee elective deferral limit | | | | This occurs when you change job; retire; become |
| ($15,500). Hence, your employer can add another | | | | disabled or die. |
| $30,500 to your account | | | | OK, you might think 403b retirement plans are |
| - If you're 50 or older at any time during the | | | | more or less similar to 401k plans. But there's a |
| year, you can contribute an additional $5,000 | | | | big difference there - your eligibility. |
| Fact 5: Lower Taxes | | | | If you're an employee in public schools and certain |
| You make 403b contributions on a pre-tax basis | | | | tax-exempt organizations (as determined by |
| which can greatly reduce your tax bill. The tax | | | | Section 501(c)(3) of the IRC), you're eligible for |
| savings grow bigger as your contributions | | | | 403b. |
| increase. | | | | |